Washington representatives want the Commodity Futures Trading Commission (CFTC) to regulate the crypto, but there is questions about the question of whether the agency is up to par.
Last week, the member of the American Congress French Hill published the first Clarity Act project, a bill that would create a new category of assets, the “digital goods”. It would allow qualified assets to negotiate relatively freely on the secondary market. It would also give the CFTC most of the authority to regulate cryptocurrency.
The CFTC is authorized and governed by the law on the exchange of goods (CEA), a sprawling law periodically modified by new legislation to modify and modernize it. Like the Securities and Exchange Commission and many other federal commissions, the CFTC includes five commissioners, each of whom must be confirmed by the Senate.
Currently, one of these chairs is empty, other commissioners who should leave the agency in the near future. This could hinder the CFTC’s ability to effectively regulate cryptographic industry if the clarity law adopts.
CFTC’s ability to act on Crypto Limited as a nomination stands
By convention, when a presidential administration changes, and in particular when the administration modifies the parties, the president of the CFTC resigns to allow the president to appoint a new president. In particular, the CEA prescribes that no more than three can be of the same political party.
When Donald Trump took office in January 2025, former Democratic president Rostin Behnam resigned from his headquarters. After a while, consider candidates to replace former president Benham, Trump appointed a replacement in February: Brian Quintenz, former commissioner, head of the A16z Crypto policy and member of the Kalshi board of directors.
So nothing happened. For months, the appointment of Quintenz had remained languid and inconsistent. It is not uncommon, because the Senate can be occupied by other high priority laws such as Trump’s budgetary bill and the Stablecoin Genius law.
This means that, since Benham’s departure in January, the commission has been imbued with two democratic commissioners and two Republicans. This does not mean that the CFTC company has been arrested; Some of the functions of the so-called independent agencies are in the president’s office, and Caroline Pham has been an acting president since Trump’s membership.
But some functions do not do so. These include the issuance or modification of regulations, policy declarations, exemptions or criteria without action. All these elements require a majority vote of the commissioners who, insofar as these regulations are controversial, will be impossible in a uniformly divided CFTC. The application is also limited, because the application division requires “the approval of the majority of the commission” to pursue new actions.
In relation: The American regulator moves to abandon the call against Kalshi
So far, the cryptography industry has agreed with this. One of the most important complaints in industry with the administration of former president Joe Biden was that it was engaged in “application regulations”. By ceasing to continue an application or regulatory program, the CFTC has solved the problem.
The most notable example was the prediction market industry. Legal prediction markets are administered in the form of “event contracts” under the law on the exchange of goods. Historically, the CFTC prohibited these contracts from involving very protruding categories such as elections, remedies and sports sports, but at the end of 2024, the Kalshi prediction market platform won a historic legal battle with the CFTC led by the then, then, to authorize the electoral markets.
After Trump won the 2024 elections, the space continued to evolve while aggressive participants pushed the limits. Crypto.com has self -censed its own prediction markets for the Super Bowl in December, and the Biden CFTC moved to block it. After Trump took office, however, the new CFTC tacitly enabled the markets to proceed, effectively creating a new market for sports betting regulated by the federal government by inaction.
In some cases, the Democratic commissioners can choose to cooperate with the Republicans, as was the case when Democrat Christy Goldsmith Romero voted to reject the attraction of the CFTC of the Victory of the Kalshi elections prediction in 2024.
However, insofar as there is a real disagreement, the Commission cannot act. And this problem can become sharp in the near future.
Other CFTC commissioners withdraw
Quintenz’s candidacy hearing in front of the Senate Committee for Agriculture, Nutrition and Forestry is scheduled for June 10, but just when it passes through the doors, other fate.
Last week, two of the four remaining CFTC commissioners, Republican summer seasinger and Democrat Goldsmith Romero, left the Commission. Although this does not change mathematics in the dead end of the Commission, it suggests that Gridlock can be more difficult to break. Indeed, the remaining republican commissioner, Pham, also said that she will leave if and when Quintenz is sworn.
In addition, he does not seem to have a plan to remedy this lack of capacity. No other commissioner has been announced and no report suggested that there is even a study list.
Perhaps the Trump administration has taken the long opinion since the Democratic Commissioner Kristin Johnson also announced his departure, but without maturity (his mandate continues until 2027). Assuming they can get Quintenz, they could simply wait for Johnson and keep him a singular control of the ostensible commission for five people.
It would be strictly legal, because article 2 (a) (3) of the CEA declares that “a vacant post of the commission does not lead to the right of the remaining commissioners to exercise all the powers of the commission”.
But does its legality mean that it is a good idea?
The delays in the betting industry was a warning sign
On February 5, the CFTC announced a round table “in about 45 days” to discuss sports betting on the prediction markets recorded by the federal government. The CFTC would listen to the comments for a few months, then bring everyone together and let them speak.
This turned out to be strongly necessary, because shortly after, a maelstrom went down to industry, while Nevada, New Jersey, Maryland and a number of other states have continued the prediction market recorded by the Federal Government Kalshi before the Federal Court.
In relation: Kalshi continues regulators of the Nevada and New Jersey games
As these cases have percolated, it has become clear that the choice to allow these new markets would finally rest with the CFTC. And yet, while the industry observers turned their eyes to the Commission, no decision is fading.
The members of the game industry waiting carefully at the announced round table expected that the time limit of 45 days had decreasing. Behind the scenes, the CFTC set the date of April 30, but publicly, the agency said nothing more on the issue up to a week before the event, when they canceled it.
For those who seek to designate the CFTC as the central regulator of the whole cryptocurrency industry, it should have been a canary moment in the country. An entire industry – sports betting regulated by the federal government – awaited a regulatory organization to weigh and, in its need, nothing has happened.
It is not an indictment of the CFTC, but it can reflect a lack of capacity. The agency was suddenly put under the spotlight at a time when its commissioners already provided for their outings and the administration’s plans for its future were far from clear.
Maybe Quintenz will solve this problem, but can the cryptocurrency industry really bet all its future on this subject?
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